AP® Macroeconomics

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Jets and Socks

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In one year, the United States can produce 500 jet planes or 800,000 pairs of socks, or any combination in between. In one year, Ireland can produce 50 jet planes or 50,000 pairs of socks, or any combination in between.

Which of the following statements is true?

A

Ireland has the absolute advantage in sock production and would benefit from trade with the US.

B

The United States has the absolute advantage in jet production only and would benefit from trade with Ireland.

C

Ireland has the absolute advantage in jet production only and would not benefit from trade with the US.

D

The US has the absolute advantage in both goods, but both countries would still benefit from trade with each other.

E

Ireland does not have the absolute advantage in either good, so they will benefit from trade with the US but the US will not benefit.